Published in News
Apple looking at Unlimited Model
by David Stellmack on20 March 2008
However, you'll pay more for the iPod
The latest Apple rumor that is floating around centers around the fact that Apple is looking at the possibility of being able to move to an “unlimited” iTunes model that would be tied to an increase in the price of the iPod to offset the cost.
The concept would give consumers that purchase one of these iPods the ability to gain access to an unlimited free music library. Some are already saying that a move to a business model such as this would put iTunes at odds with the music companies that it has been working with.
It is true that Apple continues to examine the iTunes business model and look at different ways of delivering media to consumers using the iTunes platform, and some of these business models that are being explored do include a “free” model of some sort.
While no one really knows how much the price would increase on the typical iPod if it had unlimited access to a music library via iTunes, according to the whispers we have been hearing Apple has come up with a $20 number that would be divided among the labels that would be involved in the program. It is not known how the division of the money would work out or exactly what songs would be covered in such a library model.
Apple, through the help of iTunes, has become the second largest music retailer behind Wal-Mart, but iTunes sales only account for just 10% of company revenue. While music on iTunes is popular, the majority of it is also DRM protected, which has caused many consumers to reject buying their music from iTunes and instead purchase their music from sources that offer legal music downloads in the standard MP3 format that can be used on any device supporting the MP3 standard.
While competitors to iTunes have explored subscription-based models that charge a monthly fee for access to their music on their service, these monthly fees add up to much more than the $20 per iPod that Apple is said to be offering. While the concept of unlimited content may sound like a good idea, the logistics and delivery of the content could prove to be the thorn in trying to deliver on such content that does not generate continued revenue to support the service as in a monthly subscription model.
Right now the fact that the iPod and iTunes have been able to get consumers more in the pattern of paying for access to content has to be considered a victory for the content providers, but consumers are already complaining about the DRM protection, the lack of cross compatibility and the cost. Taking the cost out of the picture by tacking it onto the price of the iPod could be one way to lessen consumer confusion.